<PAGE>
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES TWO WORLD TRADE CENTER,
INC. NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS AUGUST 31, 1999
</TABLE>
DEAR SHAREHOLDER:
The twelve-month period ended August 31, 1999 has been a difficult one for the
high-yield bond market, beginning with the fixed-income market's dramatic flight
to quality during the second half of 1998. In response to concerns about the
rapidly escalating foreign-market crisis and its potential effect on the U.S.
economy, investors sought the relative safety of U.S. government securities over
more economically sensitive investments such as equities and high-yield bonds.
This action resulted in a sharp correction in the high-yield bond market during
the second half of 1998. High-yield bond prices declined as much as 15 percent
and yields rose from approximately 9 percent to the 12-percent range. The
high-yield market also experienced its own flight to quality during late 1998,
with the middle tier of the market (B-rated issues) significantly
underperforming the upper tier (BB-rated issues), due to investors' severe risk
aversion.
As we enter the second half of 1999, the high-yield market has yet to rebound
from its woes of late last year. Fears about the foreign-market crisis have now
been replaced by concerns over potential inflation and ongoing credit-tightening
actions by the Federal Reserve Board. These concerns drove interest rates
sharply higher during the first half of 1999, resulting in a very weak
fixed-income market environment. While the high-yield market held up better than
most other fixed-income markets during the first half of 1999, it clearly
remains quite weak, due to the depressed bond market environment that exists
today. As a result, as we enter the second half of 1999, high-yield market
yields are approaching their highest and most attractive levels in nearly a
decade, providing an unusually large yield advantage over U.S. Treasuries.
PERFORMANCE
During the twelve-month period ended August 31, 1999, Morgan Stanley Dean Witter
High Yield Securities' Class A and D shares produced returns of 1.47 percent and
1.67 percent, respectively. The
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
LETTER TO THE SHAREHOLDERS AUGUST 31, 1999, CONTINUED
Fund underperformed the Lipper High Yield Bond Funds Index and the Credit Suisse
First Boston High Yield Index, which returned 5.44 percent and 4.74 percent,
respectively. For the same period, the Fund's Class B and C shares had total
returns of 0.92 percent and 0.99 percent, respectively. The performance of the
Fund's four share classes varies because of differing expenses. (Total return
figures shown assume the reinvestment of all distributions and do not reflect
the deduction of any applicable sales charges.)
The Fund's underperformance relative to its benchmarks can be attributed to its
significant, long-term core position in the B-rated sector of the market, which
was sharply affected by the high-yield market's correction in the second half of
1998. While over the long term the B-rated sector has provided very good total
returns for high-yield investors, combining both an attractive level of income
with appreciation potential, this tier of the market has clearly underperformed
over the past year, as investors' more-recent aversion to risk has taken its
toll on the market.
PORTFOLIO STRATEGY
During the fiscal year, the Fund maintained a position in the more defensive,
higher-quality end of the high-yield market, which held up well in the period's
volatile environment. Despite these defensive holdings, however, the Fund's more
significant, long-term core position in the B-rated sector of the market was
sharply affected by the recent market correction, as bond prices declined
sharply and yields rose dramatically. In terms of investment strategy, we
continue to concentrate on industry sectors that have historically proven to be
more predictable, recession resistant and/or growth oriented, such as cable
television, cellular communications, food and beverages, media, supermarkets and
telecommunications. We believe that these industry groups are poised to perform
well over the next year. We also expect to see continued consolidation and
merger activity within these industries, which should result in improved credit
quality for many of the industries' players. We continue to focus primarily on
domestic companies, given the favorable outlook for sustained growth in the U.S.
economy, and are avoiding the emerging foreign high-yield markets at this time,
because of the higher degree of uncertainty and volatility associated with many
of these markets over the past few years.
LOOKING AHEAD
Despite the high-yield market's weakness over the past year, we consider today's
substantially higher, more attractive yields and significantly discounted bond
prices an excellent investment opportunity, particularly given the relatively
low interest-rate environment and the favorable outlook for the economy.
Assuming a soft landing in the economy with growth continuing into next year, we
2
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
LETTER TO THE SHAREHOLDERS AUGUST 31, 1999, CONTINUED
would expect the high-yield market to recover, following the lead of the equity
markets, which have rebounded sharply over the past nine months. Should this
scenario materialize and high-yield bond prices recover, the Fund would
participate not only in today's exceptionally high income levels but could
potentially provide a degree of capital appreciation as well. Although the
B-rated segment of the market has not been a good investment performer over the
past year, we are confident that its attractive yield and appreciation potential
remains intact for long-term high-yield investors.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley Dean
Witter Funds. Mr. Merin is the President and Chief Operating Officer of Asset
Management for Morgan Stanley Dean Witter & Co. and President, Chief Executive
Officer and Director of Morgan Stanley Dean Witter Advisors Inc. He also serves
as Chairman, Chief Executive Officer and Director of Morgan Stanley Dean Witter
Distributors Inc. and Morgan Stanley Dean Witter Trust FSB.
We thank you for your continued support of Morgan Stanley Dean Witter High Yield
Securities and look forward to continuing to serve your investment needs.
Very truly yours,
<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES
INC.
FUND PERFORMANCE AUGUST 31, 1999
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000 -- CLASS A AND D SHARES
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
CREDIT SUISSE
TOTAL CLASS A TOTAL CLASS D FIRST BOSTON (4) LIPPER (5)
8/31/89 $9,575 $10,000 $10,000 $10,000
8/31/90 $7,328 $7,672 $9,639 $9,084
8/31/91 $7,650 $8,030 $11,922 $10,834
8/31/92 $10,338 $10,878 $14,594 $13,452
8/31/93 $12,611 $13,302 $16,897 $15,652
8/31/94 $12,696 $13,426 $17,505 $16,057
8/31/95 $14,182 $15,034 $19,818 $17,910
8/31/96 $15,713 $16,698 $21,829 $19,813
8/31/97 $18,028 $19,205 $25,196 $22,895
8/31/98 $18,100 $19,326 $25,564 $23,201
8/31/99 $18,366(3) $19,649(3) $26,776 $24,463
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR
CLASS B AND CLASS C SHARES WILL VARY FROM THE PERFORMANCE OF CLASS A AND
CLASS D SHARES SHOWN ABOVE DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES* CLASS B SHARES+
-------------------------------------------------------- ---------------------------------------------------------------
PERIOD ENDED (8/31/99) PERIOD ENDED (8/31/99)
--------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 1.47%(1) (2.84)%(2) 1 Year 0.92%(1) (3.55)%(2)
5 Years 7.66 (1) 6.73 (2) Since Inception 0.63 (1) (0.53 ) (2)
10 Years 6.73 (1) 6.27 (2)
<CAPTION>
CLASS C SHARES++ CLASS D SHARES++
-------------------------------------------------------- ---------------------------------------------------------------
PERIOD ENDED (8/31/99) PERIOD ENDED (8/31/99)
--------------------------------- ----------------------------------------
1 Year %(1) 0.99 %(2) 0.09 1 Year %(1) 1.67
<S> <C> <C> <C> <C> <C>
Since Inception 0.60 (1) 0.60 (2) 5 Years 7.91 (1)
10 Years 6.99 (1)
</TABLE>
- ------------------------
PRIOR TO JULY 28, 1997 THE FUND OFFERED ONLY ONE CLASS OF SHARES. BECAUSE THE
DISTRIBUTION ARRANGEMENT FOR CLASS A MOST CLOSELY RESEMBLED THE DISTRIBUTION
ARRANGEMENT APPLICABLE PRIOR TO THE IMPLEMENTATION OF MULTIPLE CLASSES (I.E.,
CLASS A IS SOLD WITH A FRONT-END SALES CHARGE), HISTORICAL PERFORMANCE
INFORMATION HAS BEEN RESTATED TO REFLECT THE ACTUAL MAXIMUM SALES CHARGE
APPLICABLE TO CLASS A (I.E., 4.25%) AS COMPARED TO THE 5.50% SALES CHARGE IN
EFFECT PRIOR TO JULY 28, 1997. IN ADDITION, CLASS A SHARES ARE NOW SUBJECT TO AN
ONGOING 12B-1 FEE WHICH IS REFLECTED IN THE RESTATED PERFORMANCE FOR THAT CLASS.
BECAUSE ALL SHARES OF THE FUND HELD PRIOR TO JULY 28, 1997 WERE DESIGNATED
CLASS D SHARES, THE FUND'S HISTORICAL PERFORMANCE HAS BEEN RESTATED TO REFLECT
THE ABSENCE OF ANY SALES CHARGE.
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on August 31, 1999.
(4) The Credit Suisse First Boston High Yield Index (CSFB HY) is a trader
priced portfolio constructed to mirror the public high yield debt market.
The index has several modules representing different sectors of the high
yield market including a cash paying module, a zerofix module, a
pay-in-kind module, and a defaulted module. The Index is divided into other
categories including industry, rating, seniority, liquidity, market value,
security price range, yield range and other sector divisions There are a
total of 250 sectors which are followed by the Index. The Index does not
include any expenses, fees, or charges. The Index is unmanaged and should
not be considered an investment.
(5) The Lipper High Yield Bond Funds Index is an equally-weighted performance
index of the largest qualifying funds (based on net assets) in the Lipper
High Current Yield Funds objective. The Index, which is adjusted for
capital gains distributions and income dividends, is unmanaged and should
not be considered an investment. There are currently 30 funds represented
in this index.
* The maximum front-end sales charge for Class A is 4.25%.
+ The maximum CDSC for Class B is 5.0%. The CDSC declines to 0% after six
years.
++ The maximum CDSC for Class C shares is 1% for shares redeemed within one year
of purchase.
++ Class D shares have no sales charge.
4
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (96.4%)
ADVERTISING (0.4%)
$ 10,000 Interep National Radio Sales Inc............................................. 10.00% 07/01/08 $ 10,250,000
--------------
AEROSPACE (0.4%)
12,500 Sabreliner Corp. - 144A*..................................................... 11.00 06/15/08 9,000,000
--------------
BEVERAGES - NON-ALCOHOLIC (0.3%)
10,000 Sparkling Spring Water (Canada).............................................. 11.50 11/15/07 8,075,000
--------------
BOOKS/MAGAZINES (0.6%)
4,500 American Media Operations, Inc. - 144A*...................................... 10.25 05/01/09 4,353,750
8,500 Perry Judds.................................................................. 10.625 12/15/07 7,905,000
2,000 Phoenix Color Corp........................................................... 10.375 02/01/09 1,920,000
--------------
14,178,750
--------------
BROADCAST/MEDIA (0.4%)
10,000 Tri-State Outdoor Media Group................................................ 11.00 05/15/08 10,000,000
--------------
BROADCASTING (3.0%)
15,000 Capstar Broadcasting Partners, Inc........................................... 12.75++ 02/01/09 12,750,000
6,000 Cumulus Media Inc............................................................ 10.375 07/01/08 6,195,000
15,500 Paxson Communications Corp................................................... 11.625 10/01/02 16,042,500
20,749 Spanish Broadcasting System, Inc............................................. 12.50 06/15/02 23,135,135
14,000 STC Broadcasting, Inc........................................................ 11.00 03/15/07 14,070,000
--------------
72,192,635
--------------
CABLE TELEVISION (4.9%)
30,500 21st Century Telecom Group, Inc.............................................. 12.25++ 02/15/08 13,115,000
50,687 Australis Holdings Ltd. (Australia) (a)...................................... 15.00++ 11/01/02 760,305
4,404 Australis Media Ltd. - 144A* (Australia) (a)................................. 0.00 11/01/00 512,891
3,000 Classic Cable Inc. - 144A*................................................... 9.875 08/01/08 3,015,000
16,000 Diva Systems Corp............................................................ 12.625++ 03/01/08 3,520,000
13,955 FrontierVision Operating Partners, L.P....................................... 11.00 10/15/06 14,862,075
10,000 James Cable Partners L.P. (Series B)......................................... 10.75 08/15/04 10,150,000
23,800 Knology Holdings Inc......................................................... 11.875++ 10/15/07 12,852,000
15,000 Ono Finance PLC (United Kingdom) - 144A* (Units)++........................... 13.00 05/01/09 15,900,000
41,750 Optel Inc. (Series B)........................................................ 11.50 07/01/08 27,555,000
16,000 Rifkin Acquisition Partners L.P.............................................. 11.125 01/15/06 17,520,000
--------------
119,762,271
--------------
CASINO/GAMBLING (2.1%)
22,000 Aladdin Gaming Capital Corp. (Series B)...................................... 13.50++ 03/01/10 8,800,000
20,500 Fitzgeralds Gaming Corp. (Series B) (b)...................................... 12.25 12/15/04 11,070,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 20,100 Lady Luck Gaming Finance Corp................................................ 11.875% 03/01/01 $ 20,301,000
12,300 Riviera Holdings Corp........................................................ 10.00 08/15/04 10,885,500
--------------
51,056,500
--------------
CELLULAR TELEPHONE (6.9%)
28,000 American Cellular Corp....................................................... 10.50 05/15/08 28,980,000
6,000 Centennial Cellular - 144A*.................................................. 10.75 12/15/08 6,210,000
42,531 Clearnet Communications Inc. (Canada)........................................ 14.75++ 12/15/05 39,766,485
14,500 Dobson/Sygnet Communications................................................. 12.25 12/15/08 15,225,000
20,130 Dolphin Telecom PLC (United Kingdom)......................................... 11.50++ 06/01/08 8,454,600
28,300 Dolphin Telecom PLC - 144A* (United Kingdom)................................. 14.00++ 05/15/09 11,886,000
20,000 Nextel Communications, Inc................................................... 10.65++ 09/15/07 14,750,000
17,000 Nextel Partners, Inc. - 144A*................................................ 14.00++ 02/01/09 10,200,000
24,700 Tritel PCS Inc. - 144A*...................................................... 12.75++ 05/15/09 13,955,500
26,099 Triton PCS, Inc.............................................................. 11.00++ 05/01/08 17,877,815
--------------
167,305,400
--------------
CONSTRUCTION/AGRICULTURAL
EQUIPMENT/TRUCKS (0.5%)
13,350 J.B. Poindexter & Co., Inc................................................... 12.50 05/15/04 12,549,000
--------------
CONSUMER ELECTRONICS/APPLIANCES (1.2%)
84,930 International Semi-Tech Microelectronics, Inc. (Canada) (a).................. 11.50++ 08/15/03 5,095,800
10,000 Salton Inc................................................................... 10.75 12/15/05 10,350,000
13,000 Windmere-Durable Holdings, Inc............................................... 10.00 07/31/08 12,675,000
--------------
28,120,800
--------------
CONSUMER SPECIALTIES (1.2%)
35,000 Samsonite Corp............................................................... 10.75 06/15/08 30,100,000
--------------
CONSUMER/BUSINESS SERVICES (5.3%)
28,000 Anacomp, Inc. (Series B)..................................................... 10.875 04/01/04 28,280,000
5,900 Anacomp, Inc. (Series D)..................................................... 10.875 04/01/04 5,959,000
39,250 CEX Holdings, Inc. (Series B)................................................ 9.625 06/01/08 39,642,500
13,000 Comforce Operating, Inc...................................................... 12.00 12/01/07 10,400,000
10,000 Entex Information Services, Inc.............................................. 12.50 08/01/06 6,500,000
23,500 MDC Communications Corp. (Canada)............................................ 10.50 12/01/06 23,441,250
15,200 Muzak LLC - 144A*............................................................ 9.875 03/15/09 14,972,000
--------------
129,194,750
--------------
CONTAINERS/PACKAGING (3.3%)
11,900 Berry Plastics Corp.......................................................... 12.25 04/15/04 12,019,000
12,700 Berry Plastics Corp. - 144A*................................................. 11.00 07/15/07 12,573,000
27,081 Envirodyne Industries, Inc................................................... 10.25 12/01/01 22,071,015
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 9,500 Impac Group, Inc. (Series B)................................................. 10.125% 03/15/08 $ 8,550,000
10,000 LLS Corp. - 144A*............................................................ 11.625 08/01/09 9,950,000
14,715 Packaging Resources, Inc..................................................... 11.625 05/01/03 14,862,150
--------------
80,025,165
--------------
CONTRACT DRILLING (0.9%)
34,000 Northern Offshore ASA (Series B) (Norway).................................... 10.00 05/15/05 20,740,000
--------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.9%)
15,450 High Voltage Engineering, Inc................................................ 10.50 08/15/04 14,368,500
8,000 Telecommunication Techniques Co.............................................. 9.75 05/15/08 7,600,000
--------------
21,968,500
--------------
DIVERSIFIED MANUFACTURING (3.2%)
17,500 Eagle-Picher Industries, Inc................................................. 9.375 03/01/08 16,100,000
6,200 Jordan Industries, Inc. (Series D)........................................... 10.375 08/01/07 5,983,000
20,000 Jordan Industries, Inc. (Series B)........................................... 10.375 08/01/07 19,600,000
57,338 Jordan Industries, Inc. (Series B)........................................... 11.75++ 04/01/09 37,269,700
--------------
78,952,700
--------------
DRUGSTORE CHAINS (0.4%)
10,000 Community Distributors....................................................... 10.25 10/15/04 8,800,000
--------------
ELECTRONIC DATA PROCESSING (0.9%)
5,875 Unisys Corp.................................................................. 11.75 10/15/04 6,477,187
15,000 Unisys Corp. (Series B)...................................................... 12.00 04/15/03 16,200,000
--------------
22,677,187
--------------
ELECTRONIC DISTRIBUTORS (0.4%)
20,000 CHS Electronics, Inc......................................................... 9.875 04/15/05 9,000,000
--------------
ENGINEERING & CONSTRUCTION (0.4%)
10,000 Metromedia Fiber Network (Series B).......................................... 10.00 11/15/08 9,850,000
--------------
ENTERTAINMENT & LEISURE (0.6%)
20,850 AMF Bowling Worldwide Inc. (Series B)........................................ 10.875 03/15/06 15,220,500
--------------
FOOD CHAINS (1.3%)
9,185 Eagle Food Centers, Inc...................................................... 8.625 04/15/00 8,542,050
16,500 Pueblo Xtra International, Inc............................................... 9.50 08/01/03 14,850,000
9,748 Pueblo Xtra International, Inc. (Series C)................................... 9.50 08/01/03 8,773,200
--------------
32,165,250
--------------
FOOD DISTRIBUTORS (2.5%)
14,921 Fleming Companies, Inc....................................................... 10.625 12/15/01 15,294,025
9,965 Fleming Companies, Inc. (Series B)........................................... 10.50 12/01/04 9,392,012
28,275 Fleming Companies, Inc. (Series B)........................................... 10.625 07/31/07 26,295,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 10,000 Volume Services America - 144A*.............................................. 11.25% 03/01/09 $ 10,600,000
--------------
61,581,787
--------------
HOTELS/RESORTS (1.6%)
13,000 Epic Resorts LLC (Series B).................................................. 13.00 06/15/05 11,440,000
16,000 Motels of America, Inc. (Series B)........................................... 12.00 04/15/04 9,280,000
24,035 Resort At Summerlin (Series B)............................................... 13.00 12/15/07 19,227,936
--------------
39,947,936
--------------
INDUSTRIAL SPECIALTIES (2.0%)
9,075 Cabot Safety Corp............................................................ 12.50 07/15/05 9,642,187
13,500 Indesco International........................................................ 9.75 04/15/08 7,830,000
21,963 International Wire Group, Inc................................................ 11.75 06/01/05 22,457,168
10,500 Outsourcing Services Group, Inc. (Series B).................................. 10.875 03/01/06 9,975,000
--------------
49,904,355
--------------
INTERNET SERVICES (1.3%)
13,300 Cybernet Internet Services - 144A* (Units)++................................. 14.00 07/01/09 13,300,000
8,000 Psinet Inc. - 144A*.......................................................... 11.00 08/01/09 7,960,000
3,120 Verio Inc.................................................................... 10.375 04/01/05 3,104,400
8,000 Verio Inc.................................................................... 11.25 12/01/08 8,200,000
--------------
32,564,400
--------------
MEDIA CONGLOMERATES (2.3%)
55,000 Walt Disney Co............................................................... 13.50 03/10/00 57,196,700
--------------
MEDICAL SPECIALTIES (1.2%)
25,715 MEDIQ Inc./PRN Life Support.................................................. 11.00 06/01/08 20,057,700
10,000 Universal Hospital Services, Inc............................................. 10.25 03/01/08 7,700,000
3,000 Universal Hospital Services, Inc............................................. 10.25 03/01/08 2,190,000
--------------
29,947,700
--------------
MEDICAL/NURSING SERVICES (0.2%)
7,500 Pediatric Services of America, Inc. (Series A)............................... 10.00 04/15/08 3,825,000
--------------
MILITARY/GOV'T/TECHNICAL (0.5%)
15,000 Loral Space & Communications Ltd............................................. 9.50 01/15/06 13,200,000
--------------
OFFICE EQUIPMENT/SUPPLIES (0.7%)
22,000 Mosler, Inc.................................................................. 11.00 04/15/03 17,600,000
--------------
OIL REFINING/MARKETING (0.6%)
53,800 Transamerican Refining Corp. (Series B) (a)(b)............................... 16.00 06/30/03 14,526,000
--------------
OIL/GAS TRANSMISSION (0.7%)
16,000 Petro Stopping Centers L.P................................................... 10.50 02/01/07 16,160,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
OTHER TELECOMMUNICATIONS (10.9%)
$ 11,500 Birch Telecom Inc. (Units)++................................................. 14.00% 06/15/08 $ 11,500,000
23,950 DTI Holdings Inc. - (Series B)............................................... 12.50++ 03/01/08 9,580,000
19,250 Esprit Telecom Group PLC (United Kingdom).................................... 10.875 06/15/08 19,635,000
12,585 Esprit Telecom Group PLC (United Kingdom).................................... 11.50 12/15/07 13,182,788
30,000 Facilicom International, Inc. (Series B)..................................... 10.50 01/15/08 25,500,000
47,000 Firstworld Communications, Inc............................................... 13.00++ 04/15/08 24,910,000
20,750 Globenet Comm Group Ltd. - 144A* (Bermuda)................................... 13.00 07/15/07 20,231,250
15,000 Pac-West Telecomm Inc. - 144A*............................................... 13.50 02/01/09 15,225,000
3,000 Primus Telecomm Group........................................................ 11.75 08/01/04 2,940,000
7,000 Primus Telecomm Group........................................................ 11.25 01/15/09 6,685,000
32,900 Primus Telecommunication Group, Inc. (Series B).............................. 9.875 05/15/08 28,952,000
2,000 RSL Communications PLC (United Kingdom)...................................... 9.125 03/01/08 1,710,000
9,000 RSL Communications PLC (United Kingdom)...................................... 10.50 11/15/08 8,460,000
3,000 RSL Communications PLC - 144A* (United Kingdom).............................. 9.875 11/15/09 2,640,000
15,000 Tele1 Europe BV - 144A* (Netherlands) (Units)++.............................. 13.00 05/15/09 15,900,000
12,000 Versatel Telecom BV (Netherlands)............................................ 13.25 05/15/08 12,120,000
24,500 Versatel Telecom BV (Netherlands)............................................ 13.25 05/15/08 24,745,000
5,200 Viatel Inc................................................................... 11.25 04/15/08 5,096,000
4,500 Viatel Inc. - 144A*.......................................................... 11.50 03/15/09 4,477,500
11,500 Worldwide Fiber Inc. - 144A* (Canada)........................................ 12.00 08/01/09 11,500,000
--------------
264,989,538
--------------
PACKAGE GOODS/COSMETICS (0.4%)
11,000 J.B. Williams Holdings, Inc.................................................. 12.00 03/01/04 11,000,000
--------------
PRINTING/FORMS (0.5%)
13,000 Premier Graphics Inc......................................................... 11.50 12/01/05 11,830,000
--------------
RENTAL/LEASING COMPANIES (0.4%)
9,000 Neff Corp.................................................................... 10.25 06/01/08 9,000,000
--------------
RESTAURANTS (3.9%)
141,992 American Restaurant Group Holdings, Inc. - 144A* (c)......................... 0.00 12/15/05 46,857,360
34,207 FRD Acquisition Corp. (Series B)............................................. 12.50 07/15/04 30,786,300
20,000 Friendly Ice Cream Corp...................................................... 10.50 12/01/07 18,300,000
--------------
95,943,660
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
RETAIL - SPECIALTY (1.0%)
$ 9,000 Mrs. Fields Holdings Co. - 144A* (Units)++................................... 14.00++% 12/01/05 $ 4,455,000
1,000 National Wine & Spirits...................................................... 10.125 01/15/09 1,010,000
18,225 Pantry, Inc.................................................................. 10.25 10/15/07 18,133,875
--------------
23,598,875
--------------
SERVICES TO THE HEALTH INDUSTRY (0.8%)
16,975 Unilab Corp.................................................................. 11.00 04/01/06 18,502,750
--------------
SPECIALTY CHEMICALS (0.9%)
15,000 Lyondell Chemical Co. (Series B)............................................. 9.875 05/01/07 15,225,000
6,000 Octel Developments PLC (United Kingdom)...................................... 10.00 05/01/06 6,120,000
--------------
21,345,000
--------------
SPECIALTY FOODS/CANDY (1.1%)
200,598 SFAC New Holdings Inc. - 144A* (c)........................................... 13.00 06/15/09 26,077,695
--------------
TELECOMMUNICATIONS (12.9%)
15,000 Caprock Communications Corp. (Series B)...................................... 12.00 07/15/08 15,000,000
15,000 Caprock Communications Corp. - 144A*......................................... 11.50 05/01/09 14,962,500
20,000 Covad Communications Group, Inc.............................................. 12.50 02/15/09 19,500,000
50,875 e. spire Communications, Inc................................................. 13.75 07/15/07 44,770,000
26,700 Focal Communications Corp. (Series B)........................................ 12.125++ 02/15/08 14,952,000
28,250 GST Equipment Funding, Inc................................................... 13.25 05/01/07 29,662,500
23,750 GST Telecommunications, Inc. - 144A*......................................... 10.50++ 05/01/08 13,537,500
21,800 Hyperion Telecommunication, Inc. (Series B).................................. 13.00++ 04/15/03 18,175,750
23,000 Hyperion Telecommunication, Inc. (Series B).................................. 12.25 09/01/04 23,977,500
56,800 In-Flight Phone Corp. (Series B) (a)(b)...................................... 14.00++ 05/15/02 4,828,000
26,500 Level 3 Communications, Inc.................................................. 9.125 05/01/08 24,645,000
8,500 NextLink Communications, Inc................................................. 12.50 04/15/06 9,052,500
17,500 NextLink Communications, Inc................................................. 9.00 03/15/08 16,406,250
12,500 NextLink Communications, Inc................................................. 10.75 11/15/08 12,625,000
9,000 NextLink Communications, Inc................................................. 10.75 06/01/09 9,090,000
14,965 Rhythms Netconnections (Series B)............................................ 13.50++ 05/15/08 7,632,150
27,850 Rhythms Netconnections - 144A*............................................... 12.75 04/15/09 25,343,500
11,300 Talton Holdings, Inc (Series B).............................................. 11.00 06/30/07 10,396,000
--------------
314,556,150
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TELECOMMUNICATIONS EQUIPMENT (0.9%)
$ 10,500 FWT, Inc. (a)(b)............................................................. 9.875% 11/15/07 $ 945,000
17,100 SBA Communications Corp...................................................... 12.00++ 03/01/08 9,747,000
3,500 Spectrasite Holdings, Inc. - 144A*........................................... 11.25++ 04/15/09 1,750,000
18,500 Spectrasite Holdings, Inc. - 144A*........................................... 12.00++ 07/15/08 10,360,000
--------------
22,802,000
--------------
WIRELESS COMMUNICATIONS (9.6%)
13,500 Advanced Radio Telecom Corp.................................................. 14.00 02/15/07 11,880,000
10,650 AMSC Acquisition Co., Inc. (Series B)........................................ 12.25 04/01/08 7,881,000
9,000 Arch Communications, Inc..................................................... 12.75 07/01/07 7,470,000
7,200 Arch Escrow Corp. - 144A*.................................................... 13.75 04/15/08 6,120,000
65,300 CellNet Data Systems Inc..................................................... 14.00++ 10/01/07 27,426,000
11,875 Globalstar LP/Capital Corp................................................... 11.375 02/15/04 7,837,500
1,585 Globalstar LP/Capital Corp................................................... 11.25 06/15/04 1,069,875
24,610 Globalstar LP/Capital Corp................................................... 10.75 11/01/04 16,242,600
7,500 Globalstar LP/Capital Corp................................................... 11.50 06/01/05 5,025,000
16,739 Orbcomm Global LP/Capital Corp. (Series B)................................... 14.00 08/15/04 15,734,660
3,610 Paging Network, Inc.......................................................... 8.875 02/01/06 2,021,600
31,180 Paging Network, Inc.......................................................... 10.125 08/01/07 18,396,200
20,220 Paging Network, Inc.......................................................... 10.00 10/15/08 11,727,600
20,230 USA Mobile Communications Holdings, Inc...................................... 9.50 02/01/04 16,588,600
18,800 USA Mobile Communications Holdings, Inc...................................... 14.00 11/01/04 17,860,000
69,500 WinStar Communications, Inc.................................................. 14.00++ 10/15/05 59,770,000
1,500 Winstar Equipment Corp....................................................... 12.50 03/15/04 1,552,500
--------------
234,603,135
--------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $2,734,416,983)............................................................... 2,351,887,089
--------------
</TABLE>
<TABLE>
NUMBER OF
SHARES
- ---------
<C> <S> <C>
COMMON STOCKS (d) (0.6%)
CASINO/GAMBLING (0.0%)
207,312 Fitzgeralds Gaming Corp.............................................................. 2,073
--------------
CELLULAR TELEPHONE (0.0%)
1 Price Communications Corp............................................................ --
--------------
CLOTHING/SHOE/ACCESSORY STORES (0.0%)
2,621,192 County Seat, Inc. (c)................................................................ 23,613
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
HOTELS/RESORTS (0.1%)
7,500 Motels of America, Inc. - 144A*...................................................... $ 7,500
981,277 Premier Holdings Inc. (c)*........................................................... 3,311,810
781,421 Vagabond Inns, Inc. (Class D) (d).................................................... 781
--------------
3,320,091
--------------
MEDICAL/NURSING SERVICES (0.0%)
1,151,324 Raintree Healthcare Corp. (c)........................................................ 1,295,240
--------------
MOTOR VEHICLES (0.0%)
709 Northern Holdings Industrial Corp. (c)*.............................................. --
--------------
RESTAURANTS (0.0%)
38,057 American Restaurant Group Holdings, Inc. - 144A*..................................... 9,514
--------------
SERVICES TO THE HEALTH INDUSTRY (0.4%)
1,692,700 Unilab Corp.......................................................................... 9,204,056
--------------
SPECIALTY FOODS/CANDY (0.0%)
10,908 SFAC New Holdings Inc. (c)........................................................... 109
574,725 Specialty Foods Acquisition Corp. - 144A*............................................ 5,747
--------------
5,856
--------------
TEXTILES (0.1%)
1,754,730 U.S. Leather, Inc. (c)............................................................... 1,974,071
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $130,620,028)....................................................... 15,834,514
--------------
PREFERRED STOCKS (0.2%)
OIL REFINING/MARKETING (0.0%)
94,432 Transcontinental Refining Corp.* (Conv.) (Class B)................................... 5,666
51,938 Transcontinental Refining Corp.* (Conv.) (Class C)................................... 2,908
136,926 Transcontinental Refining Corp.* (Conv.) (Class D)................................... 7,257
283,295 Transcontinental Refining Corp.* (Conv.) (Class E)................................... 17,848
--------------
33,679
--------------
RESTAURANTS (0.2%)
3,920 American Restaurant Group Holdings, Inc. (Series B).................................. 3,920,000
--------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $3,953,644)......................................................... 3,953,679
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (d) (0.4%)
AEROSPACE (0.0%)
9,000 Sabreliner Corp. - 144A*............................ 04/15/03 $ 90,000
--------------
CABLE TELEVISION (0.0%)
48,000 Diva Systems Corp. - 144A*.......................... 03/01/08 384,000
--------------
CASINO/GAMBLING (0.0%)
220,000 Aladdin Gaming, Inc. - 144A*........................ 03/01/10 2,200
--------------
HOTELS/RESORTS (0.0%)
13,000 Epic Resorts LLC - 144A*............................ 06/15/05 130
20,000 Resort At Summerlin - 144A*......................... 12/15/07 200
--------------
330
--------------
OIL REFINING/MARKETING (0.0%)
33,800 Transamerican Refining Corp. - 144A*................ 06/30/03 338
20,000 Transamerican Refining Corp. - 144A*................ 06/30/03 200
--------------
538
--------------
OTHER TELECOMMUNICATIONS (0.4%)
11,500 Birch Telecom Inc. - 144A*.......................... 06/15/08 632,500
119,750 DTI Holdings Inc. - 144A*........................... 03/01/08 1,198
47,000 Firstworld Communications, Inc. - 144A*............. 04/15/08 3,290,000
36,500 Versatel Telecom - 144A* (Netherlands).............. 05/15/08 5,840,035
--------------
9,763,733
--------------
RESTAURANTS (0.0%)
3,500 American Restaurant Group Holdings, Inc. - 144A*.... 08/15/00 --
--------------
WIRELESS COMMUNICATIONS (0.0%)
8,750 American Mobile Satellite Corp. - 144A*............. 04/01/08 306,250
--------------
TOTAL WARRANTS
(IDENTIFIED COST $442,261)...................................... 10,547,051
--------------
</TABLE>
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE
- --------- ---- --------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (0.2%)
REPURCHASE AGREEMENT
$ 4,159 The Bank of New York (dated 08/31/99; proceeds $4,159,228) (e)
(IDENTIFIED COST $4,158,593)........................................ 5.50% 09/01/99 4,158,593
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $2,873,591,509) (F).................................................... 97.8% $ 2,386,380,926
OTHER ASSETS IN EXCESS OF LIABILITIES................................................... 2.2 52,328,739
----- ---------------
NET ASSETS.............................................................................. 100.0% $ 2,438,709,665
----- ---------------
----- ---------------
</TABLE>
- ---------------------
* Resale is restricted to qualified institutional investors.
++ Currently a zero coupon bond and will pay interest at the rate shown at a
future specified date.
++ Consists of one or more classes of securities traded together as a unit;
bonds with attached warrants.
(a) Issuer in bankruptcy.
(b) Non-income producing security; bond in default.
(c) Acquired through exchange offer.
(d) Non-income producing securities.
(e) Collateralized by $588,209 U.S. Treasury Bond 10.75% due 05/15/03 valued at
$696,926 and $3,405,529 U.S. Treasury Note 6.50% due 10/15/06 valued at
$3,544,839.
(f) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $60,333,756 and the
aggregate gross unrealized depreciation is $547,544,339, resulting in net
unrealized depreciation of $487,210,583.
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $2,873,591,509)..................... $2,386,380,926
Receivable for:
Interest........................................... 55,166,804
Capital stock sold................................. 3,232,346
Prepaid expenses and other assets...................... 118,817
--------------
TOTAL ASSETS...................................... 2,444,898,893
--------------
LIABILITIES:
Payable for:
Capital stock repurchased.......................... 3,679,177
Plan of distribution fee........................... 1,367,329
Investment management fee.......................... 833,738
Accrued expenses and other payables.................... 308,984
--------------
TOTAL LIABILITIES................................. 6,189,228
--------------
NET ASSETS........................................ $2,438,709,665
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital........................................ $3,537,023,263
Net unrealized depreciation............................ (487,210,583)
Accumulated undistributed net investment income........ 10,091,362
Accumulated net realized loss.......................... (621,194,377)
--------------
NET ASSETS........................................ $2,438,709,665
==============
CLASS A SHARES:
Net Assets............................................. $68,667,017
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR
VALUE)............................................... 12,457,364
NET ASSET VALUE PER SHARE......................... $5.51
==============
MAXIMUM OFFERING PRICE PER SHARE
(NET ASSET VALUE PLUS 4.44% OF NET
ASSET VALUE)..................................... $5.75
==============
CLASS B SHARES:
Net Assets............................................. $1,927,186,239
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR
VALUE)............................................... 350,377,934
NET ASSET VALUE PER SHARE......................... $5.50
==============
CLASS C SHARES:
Net Assets............................................. $109,142,441
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR
VALUE)............................................... 19,820,677
NET ASSET VALUE PER SHARE......................... $5.51
==============
CLASS D SHARES:
Net Assets............................................. $333,713,968
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR
VALUE)............................................... 60,544,350
NET ASSET VALUE PER SHARE......................... $5.51
==============
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME......................................... $ 316,592,070
-------------
EXPENSES
Plan of distribution fee (Class A shares)............... 119,114
Plan of distribution fee (Class B shares)............... 14,241,771
Plan of distribution fee (Class C shares)............... 749,384
Investment management fee............................... 9,355,335
Transfer agent fees and expenses........................ 1,774,066
Registration fees....................................... 285,879
Shareholder reports and notices......................... 132,278
Professional fees....................................... 112,675
Custodian fees.......................................... 108,591
Directors' fees and expenses............................ 18,503
Other................................................... 42,799
-------------
TOTAL EXPENSES..................................... 26,940,395
-------------
NET INVESTMENT INCOME.............................. 289,651,675
-------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss....................................... (65,548,410)
Net change in unrealized depreciation................... (193,563,887)
-------------
NET LOSS........................................... (259,112,297)
-------------
NET INCREASE............................................ $ 30,539,378
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, AUGUST 31,
1999 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.......................... $ 289,651,675 $ 214,852,678
Net realized loss.............................. (65,548,410) (27,425,899)
Net change in unrealized depreciation.......... (193,563,887) (230,215,151)
-------------- --------------
NET INCREASE (DECREASE)................... 30,539,378 (42,788,372)
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME
Class A shares................................. (7,768,308) (2,263,130)
Class B shares................................. (229,484,007) (152,306,144)
Class C shares................................. (10,585,900) (3,375,190)
Class D shares................................. (47,045,091) (49,344,880)
-------------- --------------
TOTAL DIVIDENDS........................... (294,883,306) (207,289,344)
-------------- --------------
Net increase from capital stock transactions... 454,019,292 1,997,043,217
-------------- --------------
NET INCREASE.............................. 189,675,364 1,746,965,501
NET ASSETS:
Beginning of period............................ 2,249,034,301 502,068,800
-------------- --------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $10,091,362 AND $15,318,425,
RESPECTIVELY).............................. $2,438,709,665 $2,249,034,301
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter High Yield Securities Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's primary investment objective is to
earn a high level of current income and, as a secondary objective, capital
appreciation, but only when consistent with its primary objective. The Fund was
incorporated in Maryland on June 14, 1979 and commenced operations on
September 26, 1979. On July 28, 1997, the Fund converted to a multiple class
share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Directors); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager") that sale or bid prices are not reflective of a security's market
value, portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of the
Directors (valuation of debt securities for which market quotations are not
readily available may be based upon current market prices of securities which
are comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); (4) certain portfolio securities may be valued by an outside
pricing
17
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999, CONTINUED
service approved by the Directors. The pricing service may utilize a matrix
system incorporating security quality, maturity and coupon as the evaluation
model parameters, and/or research and evaluations by its staff, including review
of broker-dealer market price quotations, if available, in determining what it
believes is the fair valuation of the portfolio securities valued by such
pricing service; and (5) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily except where collection is not expected.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment
18
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999, CONTINUED
income or distributions in excess of net realized capital gains. To the extent
they exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, calculated daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.50% to the portion of daily net assets not exceeding
$500 million; 0.425% to the portion of daily net assets exceeding $500 million
but not exceeding $750 million; 0.375% to the portion of daily net assets
exceeding $750 million but not exceeding $1 billion; 0.35% to the portion of
daily net assets exceeding $1 billion but not exceeding $2 billion; 0.325% to
the portion of daily net assets exceeding $2 billion but not exceeding $3
billion; and 0.30% to the portion of daily net assets exceeding $3 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund pay the Distributor a fee which is accrued
daily and paid monthly at the following annual rates: (i) Class A -- up to 0.25%
of the average daily net assets of Class A; (ii) Class B -- 0.75% of the average
daily net assets of Class B; and (iii) Class C -- up to 0.85% of the average
daily net assets of Class C. In the case of Class A shares, amounts paid under
the Plan are paid to the Distributor for services provided. In the case of
Class B and Class C shares, amounts paid under the Plan are paid to the
Distributor for (1) services provided and the expenses borne by it and others in
the distribution of the shares of these Classes, including the payment of
commissions for sales of theses Classes and incentive compensation to, and
expenses of, Morgan Stanley Dean Witter Financial Advisors and others who engage
in or support distribution of the shares or who service shareholder accounts,
19
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999, CONTINUED
including overhead and telephone expenses; (2) printing and distribution of
prospectuses and reports used in connection with the offering of these shares to
other than current shareholders; and (3) preparation, printing and distribution
of sales literature and advertising materials. In addition, the Distributor may
utilize fees paid pursuant to the Plan, in the case of Class B shares, to
compensate Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment
Manager and Distributor, and other selected broker-dealers for their opportunity
costs in advancing such amounts, which compensation would be in the form of a
carrying charge on any unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Directors will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $57,928,595 at August 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 0.85% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended August 31, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.19% and
0.85%, respectively.
The Distributor has informed the Fund that for the year ended August 31, 1999,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $52,049, $4,084,168
and $88,261, respectively and received $465,568 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended August 31, 1999, aggregated
$1,216,189,733 and $847,527,788, respectively.
20
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999, CONTINUED
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At August 31, 1999, the Fund had
transfer agent fees and expenses payable of approximately $20,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended August 31, 1999 included
in Directors' fees and expenses in the Statement of Operations amounted to
$5,869. At August 31, 1999, the Fund had an accrued pension liability of $52,863
which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
At August 31, 1999, the Fund had a net capital loss carryover of approximately
$544,681,000, which may be used to offset future capital gains to the extent
provided by regulations, which is available through August 31 of the following
years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- -------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007
- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$182,201 $45,084 $166,660 $50,599 $23,296 $39,319 $12,603 $24,919
======== ======= ======== ======= ======= ======= ======= =======
</TABLE>
Due to the Fund's acquisition of Dean Witter High Income Securities, utilization
of this carryover is subject to limitations imposed by the Internal Revenue Code
and Treasury Regulations, significantly reducing the total carryover available.
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $64,990,000 during fiscal 1999.
At August 31, 1999, the Fund had temporary book/tax differences primarily
attributable to post-October losses, capital loss deferrals on wash sales and
interest on bonds in default and permanent book/tax differences primarily
atributable to an expired capital loss carryover. To reflect reclassifications
arising from the permanent differences, paid-in-capital was charged
$293,129,483, accumulated net realized loss was credited $293,124,915 and
accumulated undistributed net investment income was credited $4,568.
21
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999, CONTINUED
6. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 1999 AUGUST 31, 1998
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ----------- --------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold.............................................. 14,286,295 $ 83,691,711 6,202,135 $ 41,894,662
Reinvestment of dividends......................... 663,857 3,835,707 157,371 1,048,292
Redeemed.......................................... (7,475,634) (43,226,489) (1,669,303) (10,859,033)
------------ ------------- ----------- --------------
Net increase - Class A............................ 7,474,518 44,300,929 4,690,203 32,083,921
------------ ------------- ----------- --------------
CLASS B SHARES....................................
Sold.............................................. 158,254,779 925,430,936 138,948,772 936,076,158
Reinvestment of dividends......................... 14,916,788 86,253,971 8,546,591 57,074,799
Shares issued in connection with the acquisition
of Dean Witter High Income Securities............ -- -- 214,915,122 1,469,485,599
Redeemed.......................................... (109,357,421) (637,513,069) (78,167,748) (520,016,664)
------------ ------------- ----------- --------------
Net increase - Class B............................ 63,814,146 374,171,838 284,242,737 1,942,619,892
------------ ------------- ----------- --------------
CLASS C SHARES
Sold.............................................. 20,141,052 117,563,491 11,809,001 79,632,646
Reinvestment of dividends......................... 965,180 5,575,865 275,586 1,835,966
Redeemed.......................................... (10,489,731) (60,989,647) (3,646,560) (24,328,636)
------------ ------------- ----------- --------------
Net increase - Class C............................ 10,616,501 62,149,709 8,438,027 57,139,976
------------ ------------- ----------- --------------
CLASS D SHARES
Sold.............................................. 13,701,316 80,018,104 2,051,764 13,876,135
Reinvestment of dividends......................... 4,485,925 26,008,989 3,963,509 26,652,063
Redeemed.......................................... (22,704,747) (132,630,277) (11,183,022) (75,328,770)
------------ ------------- ----------- --------------
Net decrease - Class D............................ (4,517,506) (26,603,184) (5,167,749) (34,800,572)
------------ ------------- ----------- --------------
Net increase in Fund.............................. 77,387,659 $ 454,019,292 292,203,218 $1,997,043,217
============ ============= =========== ==============
</TABLE>
7. ACQUISITION OF DEAN WITTER HIGH INCOME SECURITIES
As of the close of business on November 7, 1997, the Fund acquired all the net
assets of Dean Witter High Income Securities ("High Income") pursuant to a plan
of reorganization approved by the shareholders of High Income on October 24,
1997. The acquisition was accomplished by a tax-free exchange of 214,915,122
Class B shares of the Fund at a net asset value of $6.84 per share for
147,149,092 shares of High Income. The net assets immediately before the
acquisition were $552,658,205 for the Fund and $1,469,485,599 for High Income,
including unrealized appreciation of $43,052,745. Immediately after the
acquisition, the combined net assets of the Fund amounted to $2,022,143,804.
22
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of capital stock outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 6.16 $ 6.82 $ 6.83
------- ------ ------
Income (loss) from investment operations:
Net investment income.................................... 0.72 0.76 0.07
Net realized and unrealized loss......................... (0.63) (0.71) (0.03)
------- ------ ------
Total income from investment operations..................... 0.09 0.05 0.04
------- ------ ------
Less dividends from net investment income................... (0.74) (0.71) (0.05)
------- ------ ------
Net asset value, end of period.............................. $ 5.51 $ 6.16 $ 6.82
======= ====== ======
TOTAL RETURN+............................................... 1.47% 0.40% 0.65%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.68%(3) 0.75%(3) 0.93%(2)
Net investment income....................................... 12.42%(3) 11.30%(3) 11.80%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $68,667 $30,678 $1,996
Portfolio turnover rate..................................... 36% 66% 113%
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* The date shares were first issued.
++ The per share amounts were computed using an average number
of shares outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated
based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS B SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 6.15 $ 6.82 $ 6.83
---------- ---------- -------
Income (loss) from investment operations:
Net investment income.................................... 0.69 0.73 0.07
Net realized and unrealized loss......................... (0.64) (0.72) (0.03)
---------- ---------- -------
Total income from investment operations..................... 0.05 0.01 0.04
---------- ---------- -------
Less dividends from net investment income................... (0.70) (0.68) (0.05)
---------- ---------- -------
Net asset value, end of period.............................. $ 5.50 $ 6.15 $ 6.82
========== ========== =======
TOTAL RETURN+............................................... 0.92% (0.23)% 0.62%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.24%(3) 1.25 %(3) 1.42%(2)
Net investment income....................................... 11.86%(3) 10.80 %(3) 11.28%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $1,927,186 $1,761,147 $15,828
Portfolio turnover rate..................................... 36% 66 % 113%
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* The date shares were first issued.
++ The per share amounts were computed using an average number
of shares outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated
based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 6.15 $ 6.82 $ 6.83
-------- ------- ------
Income (loss) from investment operations:
Net investment income.................................... 0.68 0.72 0.07
Net realized and unrealized loss......................... (0.62) (0.72) (0.03)
-------- ------- ------
Total income from investment operations..................... 0.06 -- 0.04
-------- ------- ------
Less dividends from net investment income................... (0.70) (0.67) (0.05)
-------- ------- ------
Net asset value, end of period.............................. $ 5.51 $ 6.15 $ 6.82
======== ======= ======
TOTAL RETURN+............................................... 0.99% (0.34)% 0.62%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.34%(3) 1.36 %(3) 1.52%(2)
Net investment income....................................... 11.76%(3) 10.69 %(3) 11.18%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $109,142 $56,626 $5,225
Portfolio turnover rate..................................... 36% 66 % 113%
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* The date shares were first issued.
++ The per share amounts were computed using an average number
of shares outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated
based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
25
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUGUST 31
----------------------------------------------------------------
1999++ 1998++ 1997* 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS D SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period....................... $ 6.16 $ 6.82 $ 6.71 $ 6.77 $ 6.83
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income................................... 0.74 0.78 0.79 0.83 0.80
Net realized and unrealized gain (loss)................. (0.64) (0.71) 0.15 (0.12) (0.06)
-------- -------- -------- -------- --------
Total income from investment operations.................... 0.10 0.07 0.94 0.71 0.74
-------- -------- -------- -------- --------
Less dividends from net investment income.................. (0.75) (0.73) (0.83) (0.77) (0.80)
-------- -------- -------- -------- --------
Net asset value, end of period............................. $ 5.51 $ 6.16 $ 6.82 $ 6.71 $ 6.77
======== ======== ======== ======== ========
TOTAL RETURN+.............................................. 1.67% 0.63% 15.01% 11.07% 11.98%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................... 0.49%(1) 0.51%(1) 0.68% 0.66% 0.79%
Net investment income...................................... 12.61%(1) 11.54%(1) 11.78% 12.27% 12.06%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................... $333,714 $400,582 $479,020 $460,203 $455,445
Portfolio turnover rate.................................... 36% 66% 113% 49% 74%
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* Prior to July 28, 1997, the Fund issued one class of shares.
All shares of the Fund held prior to that date have been
designated Class D shares.
++ The per share amounts were computed using an average number
of shares outstanding during the period.
+ Calculated based on the net asset value as of the last
business day of the period.
(1) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES
INC.
REPORT OF INDEPENDENT ACCOUNTANTS
</TABLE>
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter High
Yield Securities Inc. (the "Fund") at August 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
OCTOBER 8, 1999
27
<PAGE>
BOARD OF DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin MORGAN STANLEY
President DEAN WITTER
HIGH YIELD
Barry Fink SECURITIES
Vice President, Secretary and General Counsel
Peter M. Avelar [Graphic]
Vice President
Thomas F. Caloia ANNUAL REPORT
Treasurer AUGUST 31, 1999
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
directrs, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to prospectus investors in the
Fund unless preceeded or accompanied by an effective prospectus. Read the
prospectus carefully before investing.
